principles of management - Rastriya Banijya Bank

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1–3
What is Organization?
• Organization
A systematic arrangement of people brought together
to accomplish some specific purpose; applies to all
organizations—for-profit as well as not-for-profit
organizations.
Where managers work (manage)
• Common characteristics
Goals
Structure
People

Common Characteristics of Organizations

People Differences
• Operatives
People who work directly on a job or task and have
no responsibility for overseeing the work of others
• Managers
Individuals in an organization who direct the activities
of others

Distribution of Time per Activity by
Organizational Level

Identifying Managers
• First-line managers
Supervisors responsible for directing the day-to-day
activities of operative employees
• Middle managers
Individuals at levels of management between the first-
line manager and top management
• Top managers
Individuals who are responsible for making decisions
about the direction of the organization and
establishing policies that affect all organizational
members

Management Defined
• Management
The process of getting things done, effectively and
efficiently, through and with other people
Efficiency
 Means doing the thing correctly; refers to the
relationship between inputs and outputs; seeks to
minimize resource costs
Effectiveness
 Means doing the right things; goal attainment

Various Concepts of Management
• Human relation concept: Art of getting things
done from others
• Leadership and decision making concept:
Considered as science and art
• Integration concept: Coordinator of human and
other resources
• Theo Haimann considered management as;
- A process: planning, organizing, directing and
controlling

Management
Process
Activities
Management process:
planning, organizing,
leading, and controlling

Management Process
• Planning
Includes defining goals, establishing strategy, and
developing plans to coordinate activities
• Organizing
Includes determining what tasks
to be done, who is to do them,
how the tasks are to be
grouped, who reports to
whom, and where
decisions are to be made

Management Process
• Leading
Includes motivating employees, directing the activities
of others, selecting the most effective communication
channel, and resolving conflicts
• Controlling
The process of monitoring performance,
comparing it with goals, and
correcting any significant
deviations

Copyright © 2004 Prentice Hall, Inc. All rights reserved.
Mintzberg’s Managerial Roles
• Interpersonal
Figurehead
Leader
Liaison
• Informational
Monitor
Disseminator
Spokesperson
• Decisional
Entrepreneur
Disturbance hander
Resource allocator
Negotiator

Is The Manager’s Job Universal?
• Level in the organization
 Do managers manage differently based on where they are in the
organization?
• Profit versus not-for-profit
 Is managing in a commercial enterprise different than managing
in a non-commercial organization?
• Size of organization
 Does the size of an organization affect how managers function in
the organization?
• Management concepts and national borders
 Is management the same in all economic, cultural, social and
political systems?

Importance of
Managerial Roles
in Small and Large
Businesses

General Skills for Managers
• Conceptual skills
 A manager’s mental ability to coordinate all of the
organization’s interests and activities
• Interpersonal skills
 A manager’s ability to work with, understand, mentor, and
motivate others, both individually and in groups
• Technical skills
 A manager’s ability to use the tools, procedures, and
techniques of a specialized field
• Political skills
 A manager’s ability to build a power base and establish the
right connections

Specific Skills for Managers
• Behaviors related to a manager’s effectiveness:
Controlling the organization’s environment and its
resources.
Organizing and coordinating.
Handling information.
Providing for growth and development.
Motivating employees and handling conflicts.
Strategic problem solving.

How Does Management Relate To Other
Disciplines?
Anthropology
Economics Philosophy
Political Science Psychology
Sociology
Management

The Pre-modern Era
• Ancient massive construction projects
Egyptian pyramids
Great Wall of China
• Michelangelo the manager

Adam Smith’s Contribution To The Field
Of Management
• Wrote the Wealth of Nations (1776)
Advocated the economic advantages that
organizations and society would reap from the
division of labor:
 Increased productivity by increasing each worker’s skill
and dexterity.
 Time saved that is commonly lost in changing tasks.
 The creation of labor-saving inventions and machinery.

The Industrial Revolution’s Influence On
Management Practices
• Industrial revolution
Machine power began to substitute for human power
 Lead to mass production of economical goods
Improved and less costly transportation systems
became available
 Created larger markets for goods.
Larger organizations developed to serve larger
markets
 Created the need for formalized management practices.

Classical Contributions
• Classical approach
The term used to describe the hypotheses of the
scientific management theorists and the general
administrative theorists.
 Scientific management theorists
– Fredrick W. Taylor, Frank and Lillian Gilbreth, and Henry
Gantt
 General administrative theorists
– Henri Fayol and Max Weber

Scientific Management
• Frederick W. Taylor
The Principles of Scientific Management (1911)
 Advocated the use of the scientific method to define the
“one best way” for a job to be done
Believed that increased efficiency could be achieved
by selecting the right people for the job and training
them to do it precisely in the one best way.
To motivate workers, he favored incentive wage
plans.
Separated managerial work from operative work.

Scientific Management
• The process of approaching various aspects of
organizations in a scientific manner using
scientific tools such as research, management,
and analysis.

History of the Era
Industrial Age
- Migration to cities
- Reliance on electricity
and gasoline
- Changes both on the
farm and in factories
- Autos, airplanes,
movies, and radio
became common

History of the Era
• 1913 – Federal Reserve
System created
• WWI begins and Panama
Canal opens
• 1919-1933 Prohibition
• 1920 - Nineteenth
Amendment
• 1929 - Stock Market
Crash

Prior to Scientific Management
• Owner, manager, sales, and front office
personnel had little direct contact with
production activity.
• A “superintendent” was responsible for all
planning and staff functions.
• Worked with “journeyman” mechanics to try to
schedule production. No recognized staff
functions.
• Work methods were determined by individual
mechanics based on personal experience,
preference, and what tools were available for the
job. “Rule of Thumb”

Frederick Taylor
• Efficiency Expert in U.S.
Steel Industry
• Invented New Tool Designs
and Handling Methods
• Designed Stop-Watch Task
Timing
• Created Piece-Rate
Payment Scheme
• Developed Industrial
Departments

Time Studies and the Piece-Rate
System • Studied most efficient
worker
• Used stop-watch timing
to measure each
production step
• Eliminated any
unnecessary movements
• Designed standardized
instruction cards for
employees
• Employees paid for
meeting the established
rate of production

Taylor’s Four Principles of Management
• Develop a science for each element of an individual’s work, which
replaces the old rule-of-thumb method.
• Scientifically select and then train, teach, and develop the worker.
(Previously, workers chose their own work and trained themselves
as best they could.)
• Heartily cooperate with the workers so as to ensure that all work is
done in accordance with the principles of the science that has been
developed.
• Divide work and responsibility almost equally between management
and workers. Management takes over all work for which it is better
fitted than the workers. (Previously, almost all the work and the
greater part of the responsibility were thrown upon the workers).

Scientific Management Contributors
• Frank and Lillian Gilbreth
Bricklaying efficiency improvements
Time and motion studies (therbligs)
• Henry Gantt
Incentive compensation systems
Gantt chart for scheduling work operations

Administrative Management
• General administrative theorists
Writers who developed general theories of what
managers do and what constitutes good management
practice
Henri Fayol (France)
 Fourteen Principles of Management: Fundamental or
universal principles of management practice
Max Weber (Germany)
 Bureaucracy: Ideal type of organization characterized
by division of labor, a clearly defined hierarchy, detailed
rules and regulations, and impersonal relationships

Fayol’s Fourteen Principles of Management
• Division of work
• Authority
• Discipline
• Unity of command
• Unity of direction
• Subordination of the
individual
• Remuneration
• Centralization
• Scalar chain
• Order
• Equity
• Stability of tenure of
personnel
• Initiative
• Esprit de corps

1. Division Of Work
Specialization allows the
individual to build up
experience, and to
continuously improve his
skills. Thereby he can be
more productive.

2. Authority
The right to issue
commands, along with
which must go the
balanced responsibility
for its function.

3. Discipline
Employees must obey, but
this is two-sided:
employees will only obey
orders if management play
their part by providing
good leadership.

4. Unity Of Command
Each worker should have
only one boss with no
other conflicting lines of
command.

5. Unity of Direction
People engaged in the same kind of
activities must have the same
objectives in a single plan. This is
essential to ensure unity and
coordination in the enterprise. Unity
of command does not exist without
unity of direction but does not
necessarily flows from it.

6. Subordination of individual
interest
Management must see that the
goals of the firms are always
paramount.

7. Remuneration
Payment is an important
motivator although by
analyzing a number of
possibilities, Fayol points out
that there is no such thing as a
perfect system.

8. Centralization (Or
Decentralization)
This is a matter of degree
depending on the condition
of the business and the
quality of its personnel.

9. Scalar chain (Line of Authority)
A hierarchy is necessary for unity of
direction. But lateral communication is also
fundamental, as long as superiors know
that such communication is taking place.
Scalar chain refers to the number of levels
in the hierarchy from the ultimate authority
to the lowest level in the organization. It
should not be over-stretched and consist
of too-many levels

10. Order
Both material order and social
order are necessary. The
former minimizes lost time and
useless handling of materials.
The latter is achieved through
organization and selection.

11. Equity
In running a business a
‘combination of kindliness
and justice’ is needed.
Treating employees well is
important to achieve equity.

12. Stability of Tenure of
Personnel
Employees work better if job
security and career progress
are assured to them. An
insecure tenure and a high rate
of employee turnover will affect
the organization adversely.

13. Initiative
Allowing all personnel to show
their initiative in some way is a
source of strength for the
organization. Even though it
may well involve a sacrifice of
‘personal vanity’ on the part of
many managers.

14. Esprit de Corps
Management must foster the morale
of its employees. He further suggests
that: “real talent is needed to
coordinate effort, encourage
keenness, use each person’s abilities,
and reward each one’s merit without
arousing possible jealousies and
disturbing harmonious relations.”

Management By Objectives -
Principles
• Cascading of organizational goals and
objectives.
• Specific objectives for each member.
• Participative decision making.
• Explicit time period.
• Performance evaluation and feedback.

SMART Method
• Specific
• Measurable
• Achievable
• Realistic
• Time-related
Management by
Objectives also
introduced the
SMART method
for checking the
validity of the
objectives.

Weber’s Ideal Bureaucracy
• Division of Labor
• Authority Hierarchy
• Formal Selection
• Formal Rules and Regulations
• Impersonality
• Career Orientation

Human Resources Approach
• Robert Owen
Claimed that a concern for employees was
profitable for management and would relieve
human misery.
• Hugo Munsterberg
Created the field of industrial psychology—the
scientific study of individuals at work to
maximize their productivity and adjustment.

Human Resources Approach
• Mary Parker Follett
Recognized that organizations could be
viewed from the perspective of individual and
group behavior.
• Chester Barnard
Saw organizations as social systems that
require human cooperation.
Expressed his views in his book The
Functions of the Executive (1938).

Hawthorne Studies
• A series of studies done during the 1920s
and 1930s that provided new insights into
group norms and behaviors
Hawthorne effect
Social norms or standards of the group are the key
determinants of individual work behavior.
• Changed the prevalent view of the time
that people were no different than
machines.

Human Relations Movement
• Based on a belief in the importance of
employee satisfaction—a satisfied worker
was believed to be a productive worker.
• Advocates were concerned with making
management practices more humane.
Dale Carnegie
Abraham Maslow
Douglas McGregor

The Quantitative Approach
• Operations research (management
science)
Evolved out of the development of
mathematical and statistical solutions to
military problems during World War II.
Involves the use of statistics, optimization
models, information models, and computer
simulations to improve management decision
making for planning and control.

The Process Approach
• Management theory jungle (Harold
Koontz)
The diversity of approaches to the study of
management—functions, quantitative
emphasis, human relations approaches—
each offer something to management theory,
but many are only managerial tools.
• Planning, leading, and controlling activities
are circular and continuous functions of
management.

The Systems Approach
• Defines a system as a set of interrelated
and interdependent parts arranged in a
manner that produces a unified whole
Closed system : a system that is not
influenced by and does not interact with its
environment
Open system: a system that dynamically
interacts with its environment
Stakeholders: any group that is affected by
organizational decisions and policies

The Contingency Approach
• The situational approach to management
that replaces more simplistic systems and
integrates much of management theory
• Four popular contingency variables
Organization size
Routineness of task technology
Environmental uncertainty
Individual differences

Planning
• Deciding in advance :
What to do
How to do
When to do
Who is going to do it
• Bridges a gap between where we are today
and where we want to reach.
• Sets the goal of an organization.

PLANNING
• It is the basic function of management. It deals with
chalking out a future course of action & deciding in
advance the most appropriate course of actions for
achievement of pre-determined goals.
• It is an exercise in problem solving & decision making.
Planning is determination of courses of action to
achieve desired goals.
• Thus, planning is a systematic thinking about ways &
means for accomplishment of pre-determined goals.
Planning is necessary to ensure proper utilization of
human & non-human resources. It is all pervasive, it is
an intellectual activity and it also helps in avoiding
confusion, uncertainties

Organizing
• It is the process of bringing together physical,
financial and human resources and developing
productive relationship amongst them for
achievement of organizational goals.
• According to Henry Fayol, “To organize a business
is to provide it with everything useful or its
functioning i.e. raw material, tools, capital and
personnel’s”. To organize a business involves
determining & providing human and non-human
resources to the organizational structure.

•Establishing the framework of working:
How many units or sub-units or
departments are needed.
How many posts or designations are
needed in each department.
How to distribute authority and
responsibility among employees
•Once these decisions are taken,
organizational structure gets set up.

• Organizing as a process involves:
Identification of activities.
Classification of grouping of activities.
Assignment of duties.
Delegation of authority and creation of
responsibility.
Coordinating authority and responsibility
relationships.

Staffing
• Recruiting, selecting, appointing the employees,
assigning duties, maintaining cordial relationship
and taking care of grievances of employees.
• Training and Development of employees, deciding
their remuneration, promotion and increments.
• Evaluting their performance.

• It is the function of manning the organization
structure and keeping it manned. Staffing
has assumed greater importance in the
recent years due to advancement of
technology, increase in size of business,
complexity of human behavior etc. The main
purpose o staffing is to put right man on right
job i.e. square pegs in square holes and
round pegs in round holes.

•Staffing involves:
Manpower Planning (estimating man
power in terms of searching, choose the
person and giving the right place).
Recruitment, selection & placement.
Training & development.
Remuneration.
Performance appraisal.
Promotions & transfer.

Directing
• Giving direction or instruction to employees to get
the job done.
• Leadership qualities are required.
• Motivating employees by providing monatory and
non-monetory incentives.
• Comunicating with them at regular intervals.

• It is that part of managerial function which
actuates the organizational methods to work
efficiently for achievement of organizational
purposes. It is considered life-spark of the
enterprise which sets it in motion the action
of people because planning, organizing and
staffing are the mere preparations for doing
the work. Direction is that inert-personnel
aspect of management which deals directly
with influencing, guiding, supervising,
motivating sub-ordinate for the achievement
of organizational goals.

• Supervision- implies overseeing the work of
subordinates by their superiors. It is the act of
watching & directing work & workers.
• Motivation- means inspiring, stimulating or
encouraging the sub-ordinates with zeal to work.
Positive, negative, monetary, non-monetary
incentives may be used for this purpose.
• Leadership- may be defined as a process by
which manager guides and influences the work of
subordinates in desired direction.
• Communications- is the process of passing
information, experience, opinion etc from one
person to another. It is a bridge of understanding

Controlling
• Matching actual performance with the planed goal.
• If problem, tries to find out the reasons of deviation.
• Suggesting corrective measures come on the path
of plan

CONTROLLING:
• It implies measurement of accomplishment against
the standards and correction of deviation if any to
ensure achievement of organizational goals. The
purpose of controlling is to ensure that everything
occurs in conformities with the standards. An
efficient system of control helps to predict
deviations before they actually occur. According to
Theo Haimann, “Controlling is the process of
checking whether or not proper progress is being
made towards the objectives and goals and acting
if necessary, to correct any deviation”.

•Therefore controlling has following
steps:
Establishment of standard performance.
Measurement of actual performance.
Comparison of actual performance with
the standards and finding out deviation if
any.
Corrective action.

principles of management - Rastriya Banijya Bank

principles of management - Rastriya Banijya Bank

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